Loan Commitment Letters, Investment Commitment Letters (LOC), and Other Fund Evidence and Business Normalization Plans Are Key
[Asia Economy Reporter Ki-min Lee] Bidders for Ssangyong Motor are busily making last-minute efforts to meet the court's document supplementation deadline set for the 15th. However, if the supplementary documents again fail to meet the court's standards, there is a possibility that a re-bidding process may occur. Since the court has already requested document supplementation twice from the companies, failure to meet the court's conditions could raise serious doubts about their financial capabilities.
According to industry and legal sources, EY Han Young Accounting Corporation, the lead manager for the Ssangyong Motor sale, will close the submission of supplementary documents for the main bid this afternoon. Considering that EY Han Young will review the documents and then submit them to the court, it is expected that the selection of the preferred bidder and the announcement by the company will take place around the 18th.
After the main bid deadline for Ssangyong Motor, the court requested supplementary documents from ELBNT and the Edison Motors consortium by the 30th of last month. The court reviewed the submitted documents but deemed them insufficient and extended the supplementation deadline again.
The core of the documents the court requested to be supplemented includes proof of funds such as bidders' account balances, loan commitment letters, investment commitment letters (LOC), and detailed business normalization plans. The court believes that since Ssangyong Motor has repeatedly faced management difficulties after mergers and acquisitions (M&A), if a company without sufficient financial capability acquires it, there is a high possibility of falling into insolvency again.
Furthermore, the court insists that bidders must present realistic business normalization plans aimed at sustainable operations rather than merely seeking development profits related to the Ssangyong Motor Pyeongtaek plant site.
ELBNT, which submitted a bid price of 500 billion KRW, plans to receive an investment of 350 million USD from the Saudi International Industrial City Company (SIIVC) by the end of this year or early next year to establish a joint venture for electric vehicle production. Additionally, in partnership with Cardinal One Motors (formerly HAAH Automotive), a U.S. automobile distributor forming the consortium, they intend to actively promote Ssangyong Motor sales in the U.S. after acquisition.
Edison Motors, which formed a consortium with private equity funds such as KCGI and Keystone Private Equity (PE) as financial investors (FI), proposed a bid price in the high 200 billion KRW range. They also plan to secure new strategic investors (SI) to prepare a business normalization plan.
Both companies state they will submit the supplementary documents by the court's deadline, but there are suspicions in the industry regarding issues with proof of funds.
In ELBNT's case, as of last year, its capital and sales were around 3 billion KRW and 100 million KRW, respectively, and it has never disclosed any tangible electric vehicle products or achievements. Moreover, it is uncertain whether Cardinal One Motors can restore the distribution network to its previous level after HAAH's bankruptcy.
Even if Edison Motors acquires Ssangyong Motor, if the proposed bid price is too low and additional investment-related evidence is not provided, it will be difficult to gain the trust of financial and commercial creditors. Considering Ssangyong Motor's public interest bonds amounting to 400 billion KRW, it is estimated that over 1 trillion KRW will be needed after acquisition for new vehicle development and turning the company profitable.
Accordingly, industry and legal circles speculate that if the two companies fail to properly respond to the court's demands, the bidding may be canceled and a re-bidding process initiated. A legal expert familiar with corporate rehabilitation stated, "The court has already given the bidders two chances," adding, "If there are regulations regarding proof of funds in the bidding guidelines, it is highly likely that the court will proceed with cancellation and re-bidding."
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